Uber decides to pull the plug on its New York taxi service

New York's taxi rules prevent Uber for now, but that may change next year.

Uber Taxi, the smartphone-driven private transportation service, announced Tuesday that it would be halting its month-long partnership with existing New York yellow cab drivers. Uber’s black car and UberX services remain unaffected. But the New York Taxi and Limousine Commission has indicated that it may be open to modifying existing rules so that Uber and other startups can provide a more tech-friendly way to hail cabs.

In September, the San Francisco-based startup, which had previously built up a fleet of black cars that could be hailed and paid for via an app, began allowing cab drivers to receive special bookings in the Big Apple through modified iPhones supplied by Uber. The day after Uber Taxi launched, New York authorities told cab drivers that they could be fined or lose their licenses for joining the service.

"Unfortunately, as many of you have noticed, there haven’t been enough available taxis," wrote Travis Kalanick, Uber’s CEO, on the company’s blog, adding that 160 cabbies participated in the program, with a single-day high of $168 in additional fares for one driver.

"Demand far out-stripped supply, making you feel pretty lucky when you got a yellow from your iPhone," he wrote. "We did the best we could to get more yellows on the road but New York’s TLC (Taxi and Limousine Commission) put up obstacles and roadblocks in order to squash the effort around e-hail, which they privately have said is legal under the rules. We’ll bite our tongues and keep our frustration here to ourselves."

According to a statement from TLC Commissioner David Yassky, existing "exclusive contracts" are the reason that Uber can’t use cabs in the city.

Those contracts are part of the Taxicab Passengers Enhancement Project (TPEP), which provides various hardware including GPS data collection, credit card processing and two-way messaging with drivers. Under the TPEP system, Creative Mobile Technologies and VeriFone have an exclusive contract to provide such infrastructure and services to the TLC.

But Yassky added that these contracts are set to expire in February 2013 and will help the agency move "towards rule changes that will open the market to app developers and other innovators."

"We are committed to making it as easy as possible to get a safe, legal ride in a New York City taxi, and are excited to see how emerging technology can improve that process," he noted. "Our taxis have always been on the cutting edge of technological innovation, from GPS systems to credit card readers."